Help Teens Manage Money
From YouTube to Instagram, to celebrity culture, today’s teens swim in an ocean of lifestyle images that likely exceed their means. With adolescents’ annual spending at roughly $143 billion, marketers intentionally target them, knowing that they want to be perceived as cool, highly influence each other, and have “pester power” over their parents. Perhaps most importantly, they are tomorrow’s consumers.
Members of Gen Z are also digital natives, the first to be born with a device at their fingertips—often hipping their parents to the latest technology rather than the other way around. And because many possess their own devices, marketers can reach teens directly, without the same parental monitoring and supervision that existed when families watched TV together in the living room.
The fact that marketers know how to exploit young people’s psychological vulnerabilities makes it more critical than ever to teach teens about financial values. Parents must lay a firm foundation to help them learn to manage their money. Your goal is to teach them to stand on their own two feet, so they can launch from your home, become independent, and grow into self-sustaining adults able to support themselves and their families.
12 Strategies to Ground Teens Financially
These do’s and don’ts will help you to ground them financially, so that they interact with money in ways that empower them.
1) DO put your own “money mask” on first.
Your role modeling is critical to your teen’s development, so try your best to practice what you preach. Engage in practices like budgeting, saving and investing, and resisting impulse purchases. If your financial-management skills feel shaky, take steps to increase your financial literacy. From the federal government’s Consumer Financial Protection Bureau, to local adult education workshops, to courses at your local community college, to the many online financial experts, skill-building resources abound.
2) DON’T feel ashamed if, like many Americans, you are not where you want to be financially.
The fact that you carry credit-card debt or don’t have the amount of savings you’d like doesn’t mean that you can’t raise a teen with healthy money habits. The nonprofit financial counseling organization NFCC can help you overcome your money concerns. They also offer this free monthly budget planner, which can help you gain control of your own financial life.
3) DO pay bills together.
Schedule a monthly sit-down where your soon-to-be adult pays bills with you. Openly discuss your family priorities and budget. Help your teen understand the connection between behaviors like blasting the heat or air conditioning and eating out often, and how much is left over to do other things. After explaining what the bill is for and when it’s due, allow your young person to click “Send” on accounts you pay online. Ask them to address the envelope and insert the check for bills you send via snail mail. As they get the hang of things, help them create their own budget using an app for teens and young adults.
4) DO teach the connection between money and work.
Once your kid enters the real world, if they work, they get paid. Help them establish this connection early. Consider giving them an allowance for performing a task that helps the family. Create a list of additional jobs, assigning a dollar value to each one, and paying only once the tasks are carried out to your satisfaction.
5) DO encourage your young person to be satisfied with what they have.
Marketers constantly entice teens that they need the next new thing. But there is a difference between what we want and what we need. It is essential to teach this to young people. It’s also key to explain the importance of having gratitude and appreciation for what they already own. Also consider talking about tradeoffs and consequences. In other words, if they choose this, they can’t have that.
6) DO help them open a bank account and start saving.
Whether their allowance, birthday cash from their grandparents, or the money they earn from shoveling snow, understanding the importance of paying themselves first and saving at least 10 percent of their income is among the most powerful financial principles you can teach. When they open a bank account, teach them about the power of interest by using this compound interest calculator. Now that they are teenagers begin to teach them about investing and the stock market.
7) DO assist them in saving for something special.
When your teen wants to purchase a big-ticket item—whether a cell phone, a trip for spring break, or even a car—help them develop a plan to do it. Given their savings and income sources, help them calculate how long it will take to reach their goal. Help them develop a plan and strategies to save, such as starting a side job or offering to match a portion or all of what they save.
8) DO encourage them to start saving for college early.
Perhaps the most significant investment a young person can make will be in a college education. By 9th grade, school them about what you can and cannot afford and begin to discuss the various ways to pay for college. The online platform Sholly can help them identify potential scholarship sources and more.
9) DO encourage them to get a JOB.
Let’s face it — though some teens are working double-time to help pay family bills and save for college, other teens have downtime galore. During holiday breaks, over the summer, or on weekends, urge them to work. There is often a satisfying feeling that comes with earning a paycheck for hard work done.
10) DO help them start their own business.
About 40 percent of American youth aspire to be entrepreneurs. So whether by selling beats or launching their own tee-shirt line, encourage your young adult to identify an unmet need among their friends (or in the world) and create a product to satisfy it. Another great way to earn some cash? Have them use Craigslist, Ebay or an app like Mercari to unload clutter in the basement or their closet (or yours).
11) DON’T give teens a credit card without serious thought.
The day is coming when the credit-card companies will bombard them with offers of seemingly free money. Between now and then, prep them to resist the seduction by explaining how harmful debt can be. Help them learn about credit. Financial experts often disagree about the value of giving a teen a credit card. But there is little risk, and potential benefit to giving them a prepaid card. Once they turn 18, they will be eligible to use peer-to-peer products, such as CashApp, Venmo, or Zelle.
12) DO teach teens to give.
How we spend our money reflects both our values and our character. Making financial contributions to political, religious, social justice, or charitable causes can help young people use the power of their purse to do good and extend their morals into the world. So can volunteering their time and talents. Charity Navigator offers this list of non- monetary ways that teens can give.